LOS ANGELES -- Expect still another Toyota assembly plant in North America.

Toyota Motor Corp.'s North American planning group is evaluating the company's North American sales plan for 2010 and beyond. The group's early conclusion: More manufacturing capacity will be needed beyond the five assembly plants operating and two under construction.

"We have been consistent, conservative and steady. But it does make sense" to add capacity beyond what the company has already announced, says Steve Sturm, vice president of North America planning for Toyota Motor Sales U.S.A. Inc.

Among possibilities being explored is a plant in Mexico to produce the Yaris budget car, Sturm says. The Yaris replaced the Echo this year at the bottom of the Toyota brand's lineup in America. It also is sold in Canada and Mexico.

Toyota is betting on more than its own momentum for sales gains. The arrival of 64 million Generation Y'ers means the size of the U.S. vehicle market should explode by 2010, Sturm says.

"These kids are getting new cars, not used cars," he says of the group born from 1977 to 1994. "More cars are being added to the family fleet. The immigrant population is growing and buying cars."

More engines, too

Sturm declined to offer details about Toyota's production targets. In 2005, the company produced 1.56 million units in North America, 63 percent of its North American sales. Its goal is to produce in each region at least 60 percent of its sales. (See story at right.)

Plans suggested by the North American planning group must be approved by Toyota headquarters in Japan, he says.

Sturm says the planning group is exploring a broad expansion of powertrain production. "Our engine and drivetrain manufacturing needs to grow in proportion with new assembly plants," Sturm says.

Over the past decade, Toyota's North American sales have grown by an average of 8 percent annually. If things continue at that rate, Toyota's sales growth will outpace its local production growth.

Toyota will gain volume from its existing products becoming more popular and from new vehicles.

Consulting firm CSM Automotive forecasts Toyota will manufacture close to 2.1 million units in North America in 2010. Plants already under construction or previously announced will handle most of this increase.

Mike Jackson, director of North America vehicle forecasts for CSM, said Toyota might expand some existing factories, such as plants in San Antonio and Baja California, Mexico.

Yaris plant?

If Toyota were to build another Mexican assembly plant, it likely would produce the Yaris subcompact and other new vehicles from the same platform for all North American markets. Toyota now builds the Yaris for America in Japan.

Mexico got its previous-generation Yaris from France, which made it prohibitively expensive, Sturm says. Starting with the new-generation Yaris this year, Mexico is getting the car from Japan.

Toyota probably won't build Scions in Mexico even though some Scions might share underpinnings with the Yaris, Sturm says.

"We need to be close to the (Japanese) nest for Scion, to be near the engineering resources to make the quick changes and retooling necessary to keep Scion fresh," Sturm said.

Toyota is still new to the Mexican retail market, arriving in 2002. Last year Toyota sold just 35,318 units in Mexico, up from 23,876 in 2004. Toyota produced 23,670 units in Mexico last year.

Mexico's market leader is General Motors at 249,714 units, followed closely by Nissan.

What does the quality of Nissan, VW and Ford have to do with Toyotas built in the States and Canada?

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